Credit card provider Vanquis has been ordered to pay back £169 million to 1.2 million customers.
The Financial Conduct Authority (FCA) says the company failed to properly disclose the cost of a credit card add-on product called ‘Repayment Option Plan’ (ROP).
This add-on was designed to help customers manage their account by enabling them to freeze their account, take payment holidays and receive text alerts about their spending.
However, in 100% of sales calls examined by the FCA, Vanquis failed to tell customers the true cost of the product. While it did state how much the product would cost, it did not make it clear that interest would be charged on top of the fee.
The £169 million refund covers the amount customers were charged but that was not disclosed by the firm.
All customers who had the add-on between June 2003 and March 2014 will receive a refund.
Customers will be contacted by Vanquis, although if you have moved house since you had the card you should contact the provider to ensure it has your current details.
As well as paying back all affected customers, the FCA has also issued a £2 million fine to the firm.
‘These were very serious breaches’
Mark Steward, director of enforcement and market oversight at the FCA, says: “Vanquis failed to make sure customers were informed about the full cost of the ROP when it was offered to customers.
“Most Vanquis customers chose the ROP to help manage their credit without realising instead that the product might lead to their indebtedness increasing. Customers are entitled to be told all relevant information when being offered financial products. These were very serious breaches.
"Vanquis has decided now to do the right thing by acknowledging the wrong-doing and offering to compensate its customers. We are pleased the firm has extended the compensation to customers who purchased the ROP before we took responsibility for regulating the consumer credit market.”
A statement from Vanquis adds: “Our aim now is to put things right as quickly as we can by refunding the interest element of ROP to customers.
“In total, this will affect around 1.2 million customers dating back to 2003, with the total amount refunded to customers amounting to around £168 million. In most cases, existing customers will receive a credit on their account. Alternatively, past customers who are no longer with us may receive a cheque.
“Customers due a refund do not need to do anything to initiate the process. Vanquis will take all the necessary steps to proactively contact customers and will work to process refunds as quickly as possible.”